Economic News Release

International Comparison of Manufacturing Productivity and Unit Labor Costs Trends News Release



Internet address: http://www.bls.gov      USDL 09-0222
Technical information: (202) 691-5654     For Release: 10:00 A.M. EST
Media contact: (202) 691-5902             Tuesday, March 3, 2009

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT 
LABOR COST TRENDS 2007, REVISED

    Manufacturing labor productivity increased in 2007 in 14 of the 
17 economies compared by the U.S. Department of Labor's Bureau of 
Labor Statistics. The Republic of Korea and Taiwan had the largest 
productivity increases of 8.7 percent each. The United States 
productivity increase of 4.7 percent was the fourth largest. 
Singapore, included for the first time in these comparisons, had the 
steepest decline (-4.0 percent) of the three economies where 
productivity declined. (See chart 1.)
    
    Over the 2000-2007 period, of the 17 economies studied, only 
Korea, Taiwan, and Sweden had greater productivity growth in 
manufacturing than the United States. Average annual growth rates for 
selected measures over various time periods are shown in tables A and 
B.
    
    The data presented for the United States differ from those 
appearing in BLS Productivity and Costs news releases. (See technical 
notes.)  They also do not reflect the annual benchmark revision of 
the BLS Current Employment Statistics program data released on 
February 6, 2009.
    
    PRINTED COPY CONTAINS CHART AT THIS POINT:
    Chart 1. Percent change in manufacturing output per hour, 2006-
2007
         
                                  -2-
    
    Changes in unit labor costs can be expressed either in national 
currency units or in U.S. dollars. Expressed in national currency 
units, manufacturing unit labor costs increased in ten and declined 
in seven of the economies in 2007. The decline for the United States 
(-1.1 percent) was the fifth steepest decline among the economies 
compared. However, expressed in U.S. dollars, manufacturing unit 
labor costs increased in 14 of the economies and declined in 3, 
including the United States. The U.S. manufacturing sector improved 
its competitiveness against all economies compared except Taiwan and 
Japan. Declines in the dollar's exchange rate reversed the direction 
of movement in four countries and had the largest impact on 
Australia, from +3.2 percent increase in unit labor costs in national 
currency to +15.0 percent increase in unit labor costs expressed in 
U.S. dollars. This difference can be explained by the strong 
appreciation of the Australian dollar relative to the U.S. dollar. 
(See chart 2.)
    
    PRINTED COPY CONTAINS CHART AT THIS POINT:
    Chart 2. Percent change in manufacturing unit labor costs, 2006-
2007    
    
                                  -3-
    
                  Table A. Output per hour, hourly compensation, unit labor costs, and related measures
                                      Manufacturing, 17 countries or areas, 2006-2007

                                                      Percent change

      ---------------------------------------------------------------------------------------------------------------
                            Output                                        Total   Hourly  Unit Labor Costs
      Country                 per             Total    Employ-  Average  compen-  compen- National    U.S.   Exchange
      or area                Hour    Output   hours     ment     hours   sation   sation  currency  dollars   rate(1)
      ---------------------------------------------------------------------------------------------------------------


      United States           4.7      2.9     -1.7     -1.7      0.0      1.7      3.5     -1.1     -1.1       --

      Canada                  2.7     -0.9     -3.5     -3.4     -0.1     -0.1      3.6      0.8      6.5      5.6
      Australia               1.9      3.3      1.3      1.8     -0.5      6.6      5.3      3.2     15.0     11.4
      Japan                   3.5      3.6      0.2      0.5     -0.4     -0.1     -0.2     -3.6     -4.8     -1.2
      Korea, Republic of      8.7      6.5     -2.1     -1.3     -0.8      5.5      7.8     -0.9      1.8      2.7
      Singapore              -4.0      5.8     10.2      9.9      0.2      5.6     -4.2     -0.2      5.2      5.4
      Taiwan                  8.7     10.4      1.5      1.4      0.1      4.6      3.0     -5.2     -6.2     -1.1

      Belgium                 4.4      2.6     -1.7     -0.9     -0.8      3.5      5.3      0.8     10.1      9.1
      Denmark                 0.4      3.6      3.2      1.8      1.4      5.9      2.6      2.2     11.7      9.2
      France                  2.6      1.2     -1.3     -1.3      0.0      1.6      2.9      0.3      9.5      9.1
      Germany                 4.9      6.1      1.2      1.2     -0.1      2.8      1.6     -3.1      5.7      9.1
      Italy                  -0.5      1.0      1.5      0.9      0.6      3.7      2.1      2.6     12.0      9.1
      Netherlands             2.8      3.2      0.4      0.2      0.3      3.4      2.9      0.2      9.3      9.1
      Norway                 -0.2      5.3      5.5      5.0      0.5     10.5      4.8      5.0     15.0      9.5
      Spain                   3.8      2.8     -1.0     -0.6     -0.4      3.8      4.9      1.0     10.3      9.1
      Sweden                  0.5      2.3      1.8      0.6      1.2      6.7      4.8      4.2     13.8      9.1
      United Kingdom          2.6      0.7     -1.9     -2.2      0.4     -1.2      0.7     -1.9      6.5      8.6
      ---------------------------------------------------------------------------------------------------------------
      (1) Value of foreign currency relative to the U.S. dollar.

    Additional data available
    Annual indexes of the variables shown in table A are estimated 
for the time period 1950-2007 and are available at 
http://www.bls.gov/ilc/. However, for analytical purposes, the 
international comparisons in this release go back to 1979.
    
    For further information, contact the Division of International 
Labor Comparison,  formerly called the Division of Foreign Labor 
Statistics, in the Office of Productivity and Technology by phone at 
202-691-5654, by e-mail at ilchelp@bls.gov, or by mail at Bureau of 
Labor Statistics, 2 Massachusetts Avenue, NE, Room 2150, Washington, 
DC 20212. 
    
    Singapore
    With this news release, Singapore becomes the seventeenth economy 
included in the international comparisons of manufacturing 
productivity and unit labor costs. The main source of Singapore's 
economic data is the Singapore Department of Statistics. The data 
comply with international standards of national accounts and 
industrial classification. All provided series: output, employment, 
hours, and compensation are available from 1990 forward. 
    
                                  -4-
    
    Manufacturing productivity, output, and labor input
    In 2007, manufacturing productivity increased in 14 of the 17 
economies compared. The United States increase of 4.7 percent was the 
fourth largest among the 17 economies. This increase was slightly 
above the 4.0 percent U.S. average annual increase since 1979. Korea 
and Taiwan led in productivity growth (+8.7 percent each), followed 
by Germany (+4.9 percent). Singapore's productivity decline of 4.0 
percent significantly exceeded the  declines in Italy and Norway (-
0.5 and -0.2 percent respectively). Among the economies compared, 
Singapore also recorded the largest reversal from high manufacturing 
productivity growth rates in the nineties to the steepest decline in 
2007. (See tables A and B.)
    
    Between 2000 and 2007, productivity gains in the U.S. 
manufacturing sector were mainly due to declines in total hours. To a 
lesser degree, the productivity gains of the European manufacturing 
sectors compared here were also due to declines in total hours. By 
contrast, productivity gains in Korea and Taiwan were mainly due to 
increases in output. 
    
    Manufacturing output increased in 16 of the 17 economies in 2007. 
Taiwan was the leader in the growth of output with a +10.4 percent 
increase. In 2007, growth in manufacturing output in Germany, Norway, 
and Taiwan was noticeably higher than their average annual rates of 
increase over the 1979-2007 period, while the U.S. increase remained 
at 2.9 percent. Canada was the only economy that had a decline (-0.9 
percent) in manufacturing output in 2007. 
    
    While 16 of the manufacturing economies had increases in 2007 in 
output, 10 had increases in total hours worked. Singapore and Norway 
had the largest increases in total hours worked of 10.2 and 5.5 
percent, respectively. Canada had the steepest decline (-3.5 percent) 
in hours in 2007. The United States and Belgium had the fourth 
steepest decline in hours worked (-1.7 percent). 
    
    For the period 2000-2007, total hours worked in manufacturing 
declined in 16 of the 17 economies. The United Kingdom had the 
steepest average annual decline (-3.9 percent), followed by the 
United States (-3.1 percent). Singapore was the only economy that 
experienced growth (+3.7 percent) in total hours worked in this 
period. 
    
    In 2007, manufacturing employment increased in 10 of the 17 
economies. Singapore had the largest increase in employment (+9.9 
percent) - almost double the next largest growth in Norway (+5.0 
percent). Canada had the largest decline in employment (-3.4 
percent), followed by the United Kingdom (-2.2 percent) and the 
United States (-1.7 percent). 
    
    Over the 2000-2007 period, the United Kingdom and the United 
States experienced the steepest average annual declines in 
manufacturing employment (-4.0 and -3.0 percent respectively). 
    
    In 2007 average hours worked in manufacturing declined in 7 of 
the 17 economies and increased in 8, while the United States and 
France showed no change in average hours worked. This compares to 11 
economies with declining average annual hours over the 2000-2007 
period. 
    
                                  -5-
    
    Manufacturing hourly compensation and unit labor costs
    Total labor compensation in manufacturing increased in 14 of the 
17 economies in 2007. The largest increases were in Norway (+10.5 
percent) and Sweden (+6.7 percent). U. S. compensation rose by 1.7 
percent. Total labor compensation declined in the United Kingdom, 
Canada and Japan. (See tables A and B.) 
    
    Hourly compensation in manufacturing increased also in 15 of the 
17 economies in 2007, with Singapore and Japan as the exceptions. The 
largest increase was in Korea (+7.8 percent), followed by Australia 
and Belgium (+5.3 percent each). The U.S. increase of 3.5 percent in 
hourly compensation was below its average annual increase since 1979. 
(See tables A and B.) 
    
    Expressed in national currencies, unit labor costs increased in 
ten economies in 2007 and decreased in seven. The largest increase 
occurred in Norway (+5.0 percent) and the largest decline was in 
Taiwan (-5.2 percent). Unit labor costs in U.S. manufacturing 
decreased by 1.1 percent, compared to an average annual increase of 
0.6 percent since 1979.
    
    Expressed in U.S. dollars, manufacturing unit labor costs 
increased in 14 economies in 2007 and declined in 3, including the 
United States. Steeper declines occurred in Taiwan and Japan. Thus, 
the manufacturing sector in the United States improved its cost 
competitiveness against all economies compared except Taiwan and 
Japan.
    
    The unit labor costs of four economies, Germany, the United 
Kingdom, Singapore, and Korea, went from decreases to increases when 
computed on a U.S. dollar basis. Australia and Norway had the largest 
currency appreciations in 2007. Australia also showed the largest 
difference, from +3.2 percent increase in unit labor costs in 
national currency to +15.0 percent increase in unit labor costs 
expressed in U.S. dollars.
    
    Movements in exchange rates are often the dominant force behind 
changes in comparative unit labor costs and international 
competitiveness. In 2007, the U.S. dollar weakened against most of 
the currencies being compared. The exceptions were the currencies of 
Japan and Taiwan, which depreciated against the dollar. This 
depreciation of the U.S. dollar against most currencies continues a 
trend that began in 2001. In 2007, the dollar fell 9.1 percent 
against the euro, following a decline of 0.9 percent in 2006.
    
    
                                                        -6-



                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                                  Output per hour


      United States                4.0         2.8         3.7         5.6         5.0         4.7         4.7

      Canada                       2.4         2.1         3.4         3.8         1.3         2.2         2.7
      Australia                    2.2         2.3         1.3         3.4         1.9         1.0         1.9
      Japan                        3.6         3.8         3.3         3.4         3.7         1.0         3.5
      Korea, Republic of            NA          NA         9.4        10.8         7.6        10.1         8.7
      Singapore                     NA          NA         6.9         6.5         1.7         2.4        -4.0
      Taiwan                       5.8         6.1         4.7         5.6         6.4         6.8         8.7

      Belgium                      3.4         4.2         3.1         2.4         3.1         3.7         4.4
      Denmark                      2.4         2.2         2.7         1.8         2.7         4.6         0.4
      France                       3.8         3.8         3.4         4.6         3.5         4.0         2.6
      Germany (2)                  3.1         2.1         2.9         3.7         4.3         8.4         4.9
      Italy                        2.2         3.4         3.8         1.4        -0.2        -0.4        -0.5
      Netherlands                  3.4         3.3         3.7         3.3         3.2         3.2         2.8
      Norway                       1.8         1.9         0.1         1.4         3.0        -2.0        -0.2
      Spain                        2.5         3.3         3.1         0.8         2.1         2.0         3.8
      Sweden                       4.5         2.1         5.5         6.8         6.0         9.4         0.5
      United Kingdom               3.6         4.1         2.8         2.7         4.1         5.1         2.6


                                                       Output


      United States                2.9         2.2         3.6         5.4         1.8         5.5         2.9

      Canada                       2.1         1.9         2.2         6.2        -0.2        -0.4        -0.9
      Australia                    1.5         1.6         0.8         2.6         1.1        -0.9         3.3
      Japan                        2.7         4.7         0.4         1.2         2.3         3.5         3.6
      Korea, Republic of           8.8        10.7         8.2         7.9         6.9         8.5         6.5
      Singapore                     NA          NA         8.0         6.7         5.5        11.9         5.8
      Taiwan                       6.1         7.4         4.4         5.8         5.7         7.2        10.4

      Belgium                      1.8         2.6         0.6         2.3         1.0         2.8         2.6
      Denmark                      1.3         1.3         2.1         1.7         0.6         4.1         3.6
      France                       1.6         1.5         0.6         3.4         1.2         1.1         1.2
      Germany (2)                  1.4         1.2        -1.0         2.2         2.9         7.3         6.1
      Italy                        1.5         2.6         1.6         1.2        -0.2         1.2         1.0
      Netherlands                  2.2         2.4         2.0         3.3         1.4         2.7         3.2
      Norway                       0.9        -0.5         0.7         1.4         2.9         3.0         5.3
      Spain                        2.2         2.1         0.6         5.0         1.5         1.9         2.8
      Sweden                       3.8         1.7         3.8         7.4         4.6         7.9         2.3
      United Kingdom               0.7         0.9         0.5         1.3         0.1         1.8         0.7
      --------------------------------------------------------------------------------------------------------

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                                                        -7-



                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                                    Total hours


      United States               -1.1        -0.6        -0.1        -0.1        -3.1         0.7        -1.7

      Canada                      -0.3        -0.2        -1.2         2.3        -1.5        -2.5        -3.5
      Australia                   -0.7        -0.7        -0.5        -0.9        -0.8        -1.9         1.3
      Japan                       -0.9         0.8        -2.8        -2.1        -1.4         2.4         0.2
      Korea, Republic of            NA          NA        -1.1        -2.6        -0.7        -1.4        -2.1
      Singapore                     NA          NA         1.0         0.2         3.7         9.3        10.2
      Taiwan                       0.3         1.2        -0.3         0.1        -0.6         0.3         1.5

      Belgium                     -1.6        -1.6        -2.4        -0.1        -2.1        -0.9        -1.7
      Denmark                     -1.0        -1.0        -0.7        -0.1        -2.0        -0.4         3.2
      France                      -2.1        -2.2        -2.8        -1.1        -2.3        -2.8        -1.3
      Germany (2)                 -1.6        -0.9        -3.8        -1.4        -1.3        -1.1         1.2
      Italy                       -0.7        -0.8        -2.1        -0.2        -0.1         1.6         1.5
      Netherlands                 -1.1        -0.9        -1.7         0.0        -1.8        -0.5         0.4
      Norway                      -0.8        -2.3         0.6         0.0        -0.1         5.1         5.5
      Spain                       -0.3        -1.2        -2.4         4.1        -0.6        -0.1        -1.0
      Sweden                      -0.7        -0.4        -1.7         0.5        -1.3        -1.4         1.8
      United Kingdom              -2.8        -3.1        -2.3        -1.4        -3.9        -3.1        -1.9


                                                     Employment


      United States               -1.2        -0.8        -0.5         0.0        -3.0        -0.6        -1.7

      Canada                      -0.4        -0.3        -1.5         2.2        -1.4        -2.7        -3.4
      Australia                   -1.3        -1.3        -2.3        -1.1        -0.7        -1.2         1.8
      Japan                       -0.6         1.0        -1.6        -2.0        -1.5         1.5         0.5
      Korea, Republic of            NA          NA        -0.8        -2.5         0.4         0.3        -1.3
      Singapore                     NA          NA         0.7        -0.1         3.5         8.6         9.9
      Taiwan                       0.9         2.0        -0.3         0.4         0.2         1.1         1.4

      Belgium                     -1.5        -1.6        -2.2        -0.6        -1.6        -1.1        -0.9
      Denmark                     -1.0        -0.4        -1.2        -1.2        -1.7        -0.1         1.8
      France                      -1.6        -1.8        -2.5        -0.3        -1.8        -1.9        -1.3
      Germany (2)                 -1.2        -0.1        -4.2        -0.8        -1.0        -0.8         1.2
      Italy                       -0.7        -0.8        -1.9        -0.2         0.2         0.9         0.9
      Netherlands                 -1.0        -0.6        -1.6         0.1        -1.8        -0.6         0.2
      Norway                      -0.9        -2.2         0.4         0.2        -0.4         5.0         5.0
      Spain                        0.1        -0.7        -2.0         3.3         0.5        -0.2        -0.6
      Sweden                      -1.4        -1.0        -3.5         0.2        -1.4        -0.8         0.6
      United Kingdom              -2.8        -2.9        -2.7        -1.2        -4.0        -2.7        -2.2
      --------------------------------------------------------------------------------------------------------

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                                                        -8-



                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                                    Average hours


      United States                0.1         0.2         0.4        -0.1        -0.1         1.3         0.0

      Canada                       0.1         0.1         0.3         0.1        -0.1         0.1        -0.1
      Australia                    0.6         0.6         1.9         0.3        -0.2        -0.7        -0.5
      Japan                       -0.3        -0.2        -1.3        -0.1         0.1         0.9        -0.4
      Korea, Republic of            NA          NA        -0.2        -0.1        -1.1        -1.7        -0.8
      Singapore                     NA          NA         0.3         0.3         0.2         0.6         0.2
      Taiwan                      -0.6        -0.8         0.0        -0.3        -0.8        -0.8         0.1

      Belgium                     -0.1         0.0        -0.2         0.5        -0.6         0.2        -0.8
      Denmark                      0.0        -0.5         0.6         1.1        -0.3        -0.3         1.4
      France                      -0.5        -0.5        -0.3        -0.8        -0.5        -0.9         0.0
      Germany (2)                 -0.4        -0.9         0.4        -0.6        -0.3        -0.2        -0.1
      Italy                       -0.1         0.1        -0.2         0.0        -0.3         0.7         0.6
      Netherlands                 -0.1        -0.2         0.0        -0.1         0.0         0.1         0.3
      Norway                       0.0        -0.1         0.2        -0.2         0.3         0.1         0.5
      Spain                       -0.4        -0.5        -0.4         0.8        -1.1         0.2        -0.4
      Sweden                       0.7         0.7         1.9         0.3         0.1        -0.6         1.2
      United Kingdom               0.0        -0.2         0.4        -0.1         0.1        -0.4         0.4


                                Total labor compensation(3): National currency basis


      United States                3.5         4.9         3.4         4.5         0.8         4.9         1.7

      Canada                       4.4         6.5         2.4         5.2         1.9         0.4        -0.1
      Australia                     NA          NA         3.2         3.1         4.6         4.8         6.6
      Japan                        1.7         5.5         0.7        -1.0        -1.4         1.3        -0.1
      Korea, Republic of          13.5        19.6        17.6         5.4         7.3         7.0         5.5
      Singapore                     NA          NA         8.7         2.4         3.8         6.7         5.6
      Taiwan                       7.4        13.5         6.8         3.6         1.7         3.5         4.6

      Belgium                      2.7         4.4         1.3         1.9         1.6         2.7         3.5
      Denmark                      4.3         7.0         2.3         2.8         2.5         4.4         5.9
      France                       3.5         6.7         1.6         1.7         1.3         1.9         1.6
      Germany (2)                  2.7         4.6         2.4         1.6         0.9         3.0         2.8
      Italy                        6.3        11.6         3.9         2.4         2.9         3.6         3.7
      Netherlands                  2.8         3.2         2.7         3.4         1.8         2.3         3.4
      Norway                       5.4         6.4         4.1         5.1         4.9        11.6        10.5
      Spain                        6.8        10.1         5.5         5.6         3.6         4.2         3.8
      Sweden                       5.4         8.8         1.9         5.3         2.7         1.5         6.7
      United Kingdom               3.8         7.1         1.5         3.3         0.7         3.1        -1.2
      --------------------------------------------------------------------------------------------------------

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                                                        -9-



                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                  Hourly compensation(3): National currency basis


      United States                4.6         5.5         3.5         4.7         4.0         4.1         3.5

      Canada                       4.7         6.8         3.6         2.9         3.5         3.1         3.6
      Australia                     NA          NA         3.7         4.0         5.5         6.7         5.3
      Japan                        2.7         4.6         3.6         1.2         0.0        -1.1        -0.2
      Korea, Republic of            NA          NA        18.9         8.1         8.1         8.6         7.8
      Singapore                     NA          NA         7.6         2.2         0.1        -2.4        -4.2
      Taiwan                       7.1        12.1         7.1         3.4         2.3         3.2         3.0

      Belgium                      4.4         6.1         3.8         2.0         3.8         3.6         5.3
      Denmark                      5.4         8.1         2.9         2.9         4.7         4.9         2.6
      France                       5.8         9.1         4.5         2.8         3.7         4.9         2.9
      Germany (2)                  4.4         5.6         6.4         3.1         2.2         4.1         1.6
      Italy                        7.1        12.5         6.1         2.7         3.0         2.0         2.1
      Netherlands                  3.9         4.1         4.5         3.4         3.6         2.8         2.9
      Norway                       6.3         9.0         3.4         5.2         5.0         6.1         4.8
      Spain                        7.2        11.4         8.2         1.4         4.2         4.3         4.9
      Sweden                       6.1         9.1         3.7         4.8         4.1         2.9         4.8
      United Kingdom               6.8        10.5         3.9         4.7         4.8         6.4         0.7


                                    Unit labor costs(3): National currency basis


      United States                0.6         2.6        -0.2        -0.8        -1.0        -0.6        -1.1

      Canada                       2.2         4.6         0.3        -0.9         2.2         0.9         0.8
      Australia                     NA          NA         2.4         0.5         3.5         5.7         3.2
      Japan                       -0.9         0.8         0.3        -2.2        -3.5        -2.0        -3.6
      Korea, Republic of           4.3         8.1         8.7        -2.4         0.4        -1.4        -0.9
      Singapore                     NA          NA         0.6        -4.1        -1.6        -4.7        -0.2
      Taiwan                       1.2         5.6         2.3        -2.1        -3.8        -3.4        -5.2

      Belgium                      0.9         1.8         0.7        -0.4         0.6        -0.1         0.8
      Denmark                      2.9         5.7         0.2         1.1         2.0         0.3         2.2
      France                       1.9         5.1         1.0        -1.7         0.1         0.9         0.3
      Germany (2)                  1.3         3.3         3.4        -0.5        -2.0        -4.0        -3.1
      Italy                        4.8         8.8         2.2         1.2         3.1         2.4         2.6
      Netherlands                  0.5         0.8         0.7         0.1         0.3        -0.4         0.2
      Norway                       4.4         6.9         3.3         3.7         1.9         8.3         5.0
      Spain                        4.5         7.8         4.9         0.5         2.0         2.3         1.0
      Sweden                       1.5         6.9        -1.8        -1.9        -1.9        -5.9         4.2
      United Kingdom               3.1         6.2         1.1         1.9         0.6         1.3        -1.9
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page
    
    
     
                                                        -10-



                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                       Unit labor costs(3): U.S. dollar basis


      United States                0.6         2.6        -0.2        -0.8        -1.0        -0.6        -1.1

      Canada                       2.5         4.6        -2.9        -2.4         7.0         7.8         6.5
      Australia                     NA          NA         1.3        -4.2         9.1         4.5        15.0
      Japan                        1.3         4.6         9.4        -4.8        -4.8        -7.3        -4.8
      Korea, Republic of           1.9         4.4         6.9        -9.5         3.3         5.8         1.8
      Singapore                     NA          NA         5.7        -7.8         0.3        -0.1         5.2
      Taiwan                       1.6         8.5         2.7        -5.3        -4.5        -4.5        -6.2

      Belgium                      0.9         0.6         3.3        -7.9         6.5         0.8        10.1
      Denmark                      2.8         4.1         2.2        -6.1         7.9         1.2        11.7
      France                       1.4         2.7         2.8        -8.4         6.0         1.8         9.5
      Germany (2)                  2.2         4.5         5.9        -8.0         3.7        -3.1         5.7
      Italy                        2.8         5.2        -3.9        -3.7         9.1         3.3        12.0
      Netherlands                  1.3         1.7         3.3        -7.6         6.2         0.5         9.3
      Norway                       3.9         4.9         3.1        -2.9         8.1         8.9        15.0
      Spain                        2.3         3.8         0.8        -6.6         8.0         3.2        10.3
      Sweden                      -0.1         3.8        -5.4        -6.7         2.5        -4.7        13.8
      United Kingdom               2.9         4.5        -1.4         1.1         4.7         2.6         6.5


                                                  Exchange rates(4)


      United States                 --          --          --          --          --          --          --

      Canada                       0.3         0.0        -3.2        -1.6         4.8         6.8         5.6
      Australia                   -1.0        -3.2        -1.1        -4.7         5.4        -1.2        11.4
      Japan                        2.2         3.8         9.1        -2.7        -1.3        -5.3        -1.2
      Korea, Republic of          -2.3        -3.4        -1.7        -7.3         2.8         7.3         2.7
      Singapore                     NA          NA         5.0        -3.9         2.0         4.8         5.4
      Taiwan                       0.3         2.7         0.3        -3.3        -0.7        -1.2        -1.1

      Belgium                      0.0        -1.2         2.5        -7.6         5.8         0.9         9.1
      Denmark                     -0.1        -1.5         2.0        -7.1         5.8         0.9         9.2
      France                      -0.4        -2.2         1.8        -6.8         5.8         0.9         9.1
      Germany (2)                  0.9         1.1         2.5        -7.5         5.8         0.9         9.1
      Italy                       -1.9        -3.3        -6.0        -4.9         5.8         0.9         9.1
      Netherlands                  0.8         0.9         2.6        -7.6         5.8         0.9         9.1
      Norway                      -0.5        -1.9        -0.3        -6.4         6.0         0.5         9.5
      Spain                       -2.1        -3.7        -3.9        -7.1         5.8         0.9         9.1
      Sweden                      -1.6        -2.9        -3.7        -4.9         4.5         1.3         9.1
      United Kingdom              -0.2        -1.6        -2.4        -0.8         4.1         1.3         8.6
      --------------------------------------------------------------------------------------------------------
      NA=data not available
      (1) Rates of change based on the compound rate method.
      (2) Data for years before 1991 pertain to the former West Germany.
      (3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers.
      (4) Value of foreign currency relative to the U.S. dollar.    
    
                                  -11-
    
    Trade-weighted unit labor costs
    BLS constructs indexes of U.S. unit labor cost trends relative to 
a competitors' index, which is a trade-weighted average of unit labor 
cost trends in the other economies, in order to take account of 
differences in the relative importance of foreign economies to U.S. 
trade in manufactured goods. Relative trade-weighted unit labor cost 
indexes are calculated on both a national currency and a U.S. dollar 
basis.
    
    In this release, the relative U.S. trade-weighted indexes are 
estimated against 14 economies for which comparable data are 
available over the period of comparison. Australia and Singapore have 
been omitted because unit labor cost data are not available before 
1990. The indexes underlying this chart are shown in table C.
    
    Chart 3 begins in 1979, a year in which U.S. manufacturing output 
reached a business cycle peak.
    
    PRINTED COPY CONTAINS CHART AT THIS POINT:
    Chart 3. U.S. manufacturing unit labor costs relative to 14(1) 
other economies, 1979-2007
    
    In the chart, the dotted line shows that, on a national currency 
basis, U.S. unit labor costs tended to fall more or increase less 
than unit labor costs in the other economies from 1979 until 1998. 
After that, the year-to-year fluctuations do not follow a clear 
trend.
    
    The solid line compares the unit labor costs on a U.S. dollar 
basis. From 1979 to 1985, and again from 1995 to 2001, U.S. unit 
labor costs on a U.S. dollar basis generally rose more or declined 
less than in the other economies, due to the appreciation of the 
dollar. Since 2001, relative U.S. unit labor costs declined with the 
weakening of the U.S. dollar. 
    
                                  -12-
    

                              Table C. U.S. manufacturing unit labor
                          costs relative to 14(1) competitors, 1979-2007

                  ----------------------------------------------------------------
                                 Unit Labor Costs            Unit Labor Costs
                            National Currency Basis          U.S. Dollar Basis
                  Year      Own   Competitors'            Own   Competitors'   
                           Index     Index     Ratio     Index     Index     Ratio
                  ----------------------------------------------------------------

                  1979     100.0     100.0     100.0     100.0     100.0     100.0
                  1980     112.7     111.4     101.2     112.7     110.0     102.5
                  1981     117.6     120.9      97.3     117.6     108.8     108.2
                  1982     127.4     131.3      97.1     127.4     108.3     117.6
                  1983     122.7     133.6      91.8     122.7     106.2     115.5
                  1984     123.8     133.5      92.7     123.8      99.6     124.3
                  1985     126.2     136.0      92.8     126.2      97.7     129.2
                  1986     130.1     141.5      91.9     130.1     117.0     111.2
                  1987     125.4     144.6      86.7     125.4     133.6      93.9
                  1988     126.4     147.4      85.8     126.4     146.0      86.6
                  1989     129.4     151.3      85.5     129.4     147.8      87.5
                  1990     133.3     157.9      84.4     133.3     161.1      82.7
                  1991     136.7     166.1      82.3     136.7     170.7      80.1
                  1992     137.8     169.6      81.3     137.8     175.2      78.7
                  1993     136.7     170.4      80.3     136.7     167.6      81.6
                  1994     134.1     167.8      79.9     134.1     164.7      81.4
                  1995     131.6     169.6      77.6     131.6     174.3      75.5
                  1996     129.0     171.4      75.3     129.0     170.4      75.7
                  1997     127.1     169.1      75.2     127.1     156.5      81.2
                  1998     125.7     170.1      73.9     125.7     146.4      85.9
                  1999     124.4     166.7      74.6     124.4     146.3      85.0
                  2000     126.1     162.3      77.7     126.1     137.8      91.5
                  2001     127.7     167.8      76.1     127.7     134.1      95.3
                  2002     123.8     168.2      73.6     123.8     135.9      91.1
                  2003     124.6     167.7      74.3     124.6     152.2      81.9
                  2004     119.9     166.6      72.0     119.9     163.4      73.4
                  2005     119.7     164.9      72.6     119.7     166.9      71.7
                  2006     119.0     164.0      72.6     119.0     169.8      70.1
                  2007     117.7     162.7      72.3     117.7     177.2      66.4
                  ----------------------------------------------------------------
                  (1) Australia and Singapore have been omitted from this table 
                      because data are not available before 1990.


                                  -13-
    
    Technical Notes
    
    The comparisons in this release are based on data available to 
the Bureau of Labor Statistics as of the end of January 2009 from the 
national statistical offices of the 17 economies compared.
    
    Definitions. Labor productivity is defined as real output per 
hour worked. Although the labor productivity measure presented in 
this release relates output to the hours worked of persons employed 
in manufacturing, it does not measure the specific contributions of 
labor as a single factor of production. Rather, it reflects the joint 
effects of many influences, including new technology, capital 
investment, capacity utilization, energy use, and managerial skills, 
as well as the skills and efforts of the workforce.
    
    Unit labor costs are defined as the cost of labor input required 
to produce one unit of output. They are computed as compensation in 
nominal terms divided by real output. Unit labor costs can also be 
computed by dividing hourly compensation by output per hour, that is, 
by labor productivity. 
    
    Methodology. BLS constructs trends of manufacturing labor 
productivity and unit labor costs from three basic aggregate 
measures: output, total labor hours, and total compensation. The 
hours and compensation measures, as well as the employment measures, 
refer to employees (wage and salary earners) in Belgium and Taiwan. 
For all other economies, the measures refer to all employed persons, 
including employees, self-employed persons, and unpaid family 
workers. 
    
    In general, the measures relate to total manufacturing as defined 
by the International Standard Industrial Classification (ISIC). 
However, the measures for France include parts of mining. Data for 
the United States are in accordance with the North American Industry 
Classification System (NAICS 97), except compensation data before 
1987. Canadian data are in accordance with NAICS 97 starting in 1961.
    
    The data for the most recent years are based on the United 
Nations System of National Accounts 1993 (SNA 93). For earlier years, 
data were compiled according to previously used systems.
    
    To obtain historical time series, BLS may link together data 
series which were compiled according to different accounting systems 
by national statistical offices.
    
    Output. For most of the economies, the output measures are real 
value added in manufacturing, based on national accounts. However, 
output for Japan prior to 1970 and for the Netherlands prior to 1960 
are indexes of industrial production. The manufacturing value added 
measures for the United Kingdom are essentially identical to their 
indexes of industrial production.
    
    Most economies now estimate manufacturing real output using 
moving price weights, as recommended by SNA 93. However, many earlier 
time periods within the historical real output series have been 
estimated using fixed price weights, with the weights updated 
periodically (for example, every 5 or 10 years). Taiwan and Korea 
still use fixed price weights to estimate real output.
    
    
                                  -14-
    
    Measures of real output also may differ among economies because 
of different approaches to quality adjustments.
    
    For the United States, the output measure for the manufacturing 
sector is a chain-weighted index of real gross product originating 
(deflated value added) produced by the Bureau of Economic Analysis 
(BEA) of the U.S. Department of Commerce. For more information on the 
U.S. measure, see "Improved Estimates of Gross Product by Industry 
for 1947-98," Survey of Current Business, June 2000, pp. 24-38 and 
"Gross Domestic Product by Industry for 1947-86. New Estimates Based 
on the North American Industry Classification System," Survey of 
Current Business, December 2005, pp. 70-84.
    
    The U.S. manufacturing output series used for international 
comparisons differs from the manufacturing output series that BLS 
publishes as part of its major sector productivity and costs measures 
for the United States. The international comparisons program uses a 
value added output concept, while the major sector series is on a 
sectoral output basis. Sectoral output is gross output less intra-
sector sales and transfers. The U.S. major sector productivity and 
costs measures can be found at http://www.bls.gov/lpc/home.htm. For 
information on sectoral output, see "Measurement of productivity 
growth in U.S. manufacturing," Monthly Labor Review, July 1995, pp. 
13-28.
    
    Value added measures have been used for the international 
comparisons series because the data are more readily available from 
the economies' national accounts, whereas sectoral output would 
require a complex estimation procedure. Even though BLS has 
determined that sectoral output is the correct concept for U.S. 
measures of productivity, there are other considerations that may 
make value added a better concept for international comparisons of 
labor productivity, such as differences among economies in the extent 
of vertical integration of industries.
    
    Labor Input. For the most recent years, the term "hours" refers 
to hours worked. For some earlier years, BLS uses other hours 
measures. 
    
    For the United States, the employment and hours data series 
beginning with 1987 are taken from the NAICS-based manufacturing all-
employed series published by BLS as part of the major sector 
productivity and cost measures. For the period before 1987, these 
series are linked to NAICS-based, employees-only data from the 
Current Employment Statistics (CES) program. 
    
    For most other economies, recent years' aggregate hours series 
are obtained from national statistical offices, usually from national 
accounts. However, for some earlier years, BLS calculates the 
aggregate hours series using employment figures published with the 
national accounts, or other comprehensive employment series, and data 
on average hours worked.
    
    Compensation (Labor Cost). The compensation measures are from 
national accounts. Compensation includes employer expenditures for 
legally required insurance programs and contractual and private 
benefit plans, in addition to all payments made in cash or in kind 
directly to employees. When data for the self-employed are not 
available, total compensation is estimated by assuming the same 
average compensation for the self-employed as for employees.
    
                                  -15-
    
    Labor cost is defined as compensation plus employment taxes minus 
employment subsidies, i.e. the cost to employers of using labor. For 
most economies, labor cost is the same as compensation. However, for 
Australia, Canada, France, Singapore, and Sweden, compensation is 
increased to account for important taxes on payroll or employment. 
For the United Kingdom, compensation is reduced between 1967 and 1991 
to account for subsidies.
    
    Data for Germany. German data prior to 1991 pertain to the former 
West Germany. The data series are linked in 1991.
    
    Data for Australia. Australian data are published by fiscal 
years, which run from July 1 through June 30. The Australian Bureau 
of Statistics provides unpublished calendar-year data for real value 
added, employment, and hours worked. For compensation, BLS estimates 
calendar-year series using two-year moving averages of the data for 
fiscal years. Manufacturing compensation data are not available for 
years prior to 1990.
    
    Data for Recent Years. The measures for recent years may be 
estimates based on various current indicators until national accounts 
and other preferred statistics become available.
    
    Trade-Weighted Measures. The trade weights used to calculate the 
relative unit labor cost indexes of the United States and the other 
economies are based on the relative dollar value of U.S. trade in 
manufactured commodities (exports plus imports) with each economy in 
2007. The trade data are compiled by the U.S. Census Bureau.
    
    The following weights were used for the entire period for which 
trade-weighted unit labor cost measures are produced:
    
         Weight                                    Weight
                        
         Canada       36.12         Germany          10.64
         Japan        16.00         Italy             3.54
         Korea         6.09         Netherlands       3.68
         Taiwan        4.84         Norway            0.54
         Belgium       3.02         Spain             1.36
         Denmark       0.65         Sweden            1.42
         France        4.82         United Kingdom    7.28
    
    
    Level Comparisons. The BLS measures are limited to trend 
comparisons. BLS does not prepare level comparisons of manufacturing 
productivity and unit labor costs because of data limitations and 
technical problems in comparing the levels of manufacturing output 
among economies. Each economy measures manufacturing output in its 
own currency units. To compare outputs among economies, a common unit 
of measure is needed. Market exchange rates are not suitable as a 
basis for comparing output levels. What is needed are purchasing 
power parities, which are the number of foreign currency units 
required to buy goods and services equivalent to what can be bought 
with one unit of U.S. currency.

                              -16-
    
    
    Purchasing power parities, for most economies, are available for 
total gross domestic product (GDP) from the Organization for Economic 
Cooperation and Development (OECD). However, these parities are 
derived for expenditures made by consumers, business, and government 
for goods and services - not for value added by industry. Therefore, 
they do not provide purchasing power parities by industry. The 
parities developed for total GDP are not suitable for each component 
industry, such as manufacturing.
    
    European exchange rates. On Jan. 1, 1999, 11 European countries 
joined the European Monetary Union (EMU). In subsequent years several 
other European countries became EMU members. The euro, the official 
currency of the EMU, was established at fixed conversion rates to the 
previous national currencies of EMU members. Data on manufacturing 
value added and labor compensation for euro-area countries are now 
reported in euros. 
    
    In order to maintain historical continuity of data series, data 
for euro-area countries for years before 1999 have been converted to 
euros by applying the fixed euro/national currency conversion rates. 
For countries and years where output, compensation, and exchange 
rates are converted from national currency units into euros, the 
following fixed conversion rates are used:
    
1 euro equals: 40.3399 Belgian francs    1936.27 Italian lire
               6.55957 French francs     2.20371 Netherlands guilders
               1.95583 German marks      166.386 Spanish pesetas
    
    The currency exchange rates cited in this publication are annual 
averages of daily buying rates in New York City.
    



Last Modified Date: March 03, 2009
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